Slight uptick in Indian rupee against UAE dirham, gains on dollar sales by foreign banks

Most Asian currencies saw a slight uptick, with the Philippine peso leading the gains, rising 0.3%

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By Reuters

Published: Fri 1 Mar 2024, 10:26 AM

The Indian rupee gained on Friday, aided by the strength of its Asian peers, positive market sentiment following a surprise surge in domestic GDP data and dollar sales by foreign banks, traders said.

The rupee was at 22.576 against the UAE dirham as of 9.15am UAE Time, marking a 0.07 per cent increase from its previous session close at 22.591.

Most Asian currencies saw a slight uptick, with the Philippine peso leading the gains, rising 0.3%.

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The dollar-rupee pair was "well-offered," with foreign banks dominating dollar sales in early trading, a foreign exchange trader at a private bank said.

India's GDP growth in the October-December quarter far exceeded expectations, with the economy expanding by 8.4%, against the 6.6% anticipated by economists polled by Reuters.

The surprise jump in GDP data alongside an in-line US inflation figures further bolstered market sentiment, potentially supporting an upside for the rupee.

The positive bias on the rupee persists, though the extent of appreciation will depend on how much the Reserve Bank of India allows the currency to gain, Anindya Banerjee, head of foreign exchange research at Kotak Securities, said.

The RBI has likely been buying dollars on days with substantial inflows, limiting the rupee's upside, traders said.

The US personal consumption expenditures (PCE) price index rose 0.3% month-on-month in January, data released on Thursday showed.

The data for December was revised lower to show the PCE price index gaining 0.1% instead of the previously reported 0.2%.

While the inflation data had little impact on expectations of rate cuts by the Federal Reserve, Cleveland Fed President Loretta Mester said on Thursday that three rate cuts over 2024 remain her baseline view, contingent upon continued progress in controlling inflation and a labour market that cools but stays healthy.

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Reuters

Published: Fri 1 Mar 2024, 10:26 AM

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